Insurance sector in india
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Insurance sector in india

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For full text artical go to: http://www.educorporatebridge.com/insurance/insurance-sector-in-india/Insurance sector in India is considered as a huge market due to its momentous untapped potential. ...

For full text artical go to: http://www.educorporatebridge.com/insurance/insurance-sector-in-india/Insurance sector in India is considered as a huge market due to its momentous untapped potential. This sector is said to improve the standard of living of the people in an economy as it leads to risk free lives, promotes entrepreneurship, mobilizes savings and leads to protection of trade and industry which contributes in human progress.

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Insurance sector in india Insurance sector in india Presentation Transcript

  • Insurance Sector in India ~ By edu CBA
  • Insurance - A life savior • Consider these situations where suddenly the family bread earner passes away or a family member gets a fatal disease which requires immediate medical attention or all your life savings gets stolen. Won’t it be a time of trauma and stress not only for you but also your near and dear ones? • Can you fight off all those risks and unexpected disaster all by yourself? If you think so it is great otherwise insurance is the best alternative. • In simple words, insurance means you pay a lump sum amount to get protection against an unforeseen accident of a large magnitude.
  • Milestones in the development of Insurance sector in India • India has a deep inherent history when it comes to Insurance. • It has been mentioned in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). These writings talk about bringing together resources to be used in cases of calamities. • Life Insurance as a business came into picture in early 1800’s with Oriental Life Insurance Company in Calcutta. Later in 1912 the Indian Life Assurance Companies Act, 1912 was undertaken, which was the first statutory measure to regulate life business. • Due to claims of unfair trade practices the Life Insurance Corporation came into existence in the year 1956. The LIC enjoyed monopoly till the late 90s after which the sector was reopened to the private sector. • In the year 1999, following the recommendations of the Malhotra Committee report the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry
  • Growth Drivers of Insurance sector in India • India is a growing economy with the increasing number of working population in the country; the disposable income is also increasing. • As the income increases the spending on consumer goods, automobiles, travel which are various insurance lines. • The awareness about insurance among people has been increasing along with the number of providers and the range of products available at competitive prices. • Moreover the regulatory environment is conducive for the Insurance sector to bloom. All these factors lead to increase in the universe of potential buyers for insurance such as individuals, companies across businesses. • More than two-thirds of India’s population lives in rural areas which are untapped when it comes to insurance products. Micro insurance can be focused upon to ensure coverage in these areas.
  • Insurance sector in India- Issues and challenges • Public vs. Private In insurance sector the Public sector is still dominating after even a decade of opening the doors of this sector. This situation does put some burden on the private sector companies to innovate and differentiate themselves so that they could have a better share in the market. • Client Servicing Making the potential customers understand about insurance products in a simple and meaningful way poses a big challenge in front of insurance companies. • Staying profitable According to a research the break even period in the life insurance business has increased from the expected 9-10 years to about 13-15 years now. It is already under the pressure of massive expansion costs but also has to face the problem of diminishing volumes as policy lapses increase year on year.
  • Insurance Companies • According to the report by IRDA, as at the end of September 2013, there are fifty two insurance companies operating in India, out of which twenty four are in the life insurance business and other twenty seven are in non-life insurance business. • Insurance companies have been divided mainly into two parts; • Life insurance companies which cater to only one product in insurance which is providing life insurance. • General insurance companies which cater to various products in insurance such as health insurance, marine insurance, car insurance, property insurance etc. but except life insurance.
  • Insurance sector in India compared to the Global scenario • Globally, the share of life insurance business in total premium was 56.8 %. However, the share of life insurance business in Asian region was only 28.9 %, which is in contradiction with the global trend. • For India, the share of life insurance business in total insurance business was very high at 80.2 % while the share of non-life insurance business was small at 19.8 %. • In life insurance business, India is ranked 10th among the 88 countries, for which data are published by Swiss Re. During 2012, the life insurance premium in India declined by 6.9 % (inflation adjusted). During the same period, the global life insurance premium increased by 2.3 %. • However, the share of Indian non-life insurance premium in global non-life insurance premium was small at 0.66 % and India ranks 19th in global non-life insurance market.
  • Way Ahead • The prospects of the Indian insurance sector look promising and optimistic. • Insurance sector has registered a robust growth standing at US$ 72 billion in 2012 and likely to grow to US$ 280 billion by 2020. • India has had a favorable regulatory environment which boosts foreign player participation into this huge untapped. • The decision of liberalizing the insurance sector and allowing private participation has enabled its consistent growth over the years. • Moreover the consumers were made available number of choices in terms of products and insurance providers which increased the standard of service quality. • Raising the foreign direct investment (FDI) limit from 26 per cent to 49 per cent in the sector is viewed as a key element to stimulate the insurance industry in India.
  • Knowledge is like a line with no ends… To know more on this topic click on the link below http://www.educorporatebridge.com/insurance/insurance- sector-in-india/
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